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The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us) STATE OF MICHIGAN FRANK J. KELLEY, ATTORNEY GENERAL Opinion No. 6503 March 2, 1988 RETIREMENT AND PENSIONS: Public School Employees Retirement System--purchase of military service credit SCHOOL EMPLOYEES RETIREMENT SYSTEM: Purchase of military service credit The computation of payment for the purchase of military service credit by a member of the Public School Employees Retirement System is based upon the highest compensation received by the member in a school fiscal year, regardless of the school year in which it may have been earned. Honorable Ken DeBeaussaert State Representative The Capitol Lansing, Michigan 48909 You have requested my opinion on the question whether the Public School Employees Retirement Act of 1979, 1980 PA 300, Sec. 374, MCL 38,1374; MSA 15.893(184), requires, for purposes of calculating military service credit purchases, the inclusion of all compensation received in a given school fiscal year, even though the compensation represents more than one school fiscal year of earned income. You have described a situation in which a public school teacher who normally had elected to receive his pay in 26 equal installments spread over a 52-week period decided in one year to receive only 21 paychecks. The net effect of the change was to increase the salary received by the teacher in the school fiscal year 1985-1986 by approximately $4,100.00. The teacher desires to purchase prior military service credit which will cost approximately $650.00 more if the formula pursuant to which the cost of the purchase is based includes the 'extra' $4,100.00 received by him in the year that he elected to take his pay in 21 equal installments. Act 300, Sec. 74, reenacted in substantially identical language the former corresponding provisions of the predecessor public school employees retirement act, 1945 PA 136, c I, Secs. 214, and c II, Sec. 318b, for the respective retirement systems. 1945 PA 136, c I, Sec. 214(2), and c II, Sec. 318b, were added by 1976 PA 357. As originally enacted, each provided that military service credit may be purchased for not more than 5 years of active duty upon payment to the retirement system of an amount equal to 5% of the member's full time or equated full-time compensation for the fiscal year in which payment is made. These provisions became effective on December 23, 1976. In 1977, the Legislature amended Secs. 214(2) and 318b by means of 1977 PA 58 to add: 'For purposes of computing payment under this section, the compensation amount used shall not be less than the highest fiscal year compensation previously received by a member. The compensation amount used for computing payment under this subsection shall not exceed the member's final average compensation.' (Emphasis added.) The quoted language is identical with Act 300, Sec. 74, which provides that the member of the retirement system 'may elect or receive service credit for not more than 5 years of active duty upon request and payment to the retirement system of an amount equal to 5% of the member's full-time or equated full-time compensation for the school fiscal year in which payment is made multiplied by the years of service that the member elects to purchase up to the maximum. For the purposes of computing payment under this section, the compensation amount used shall not be less than the highest school fiscal year compensation previously received by a member. The compensation amount used for computing payment under this section shall not exceed the member's final average compensation. Service shall not be credited if it is or would be credited under any other federal, state, or local publicly supported retirement system, but this restriction shall not apply to a person who has acquired or will acquire retirement eligibility under the federal government for service in the reserve. Service shall not be credited under this section until the member has accumulated 10 years of full-time or equated full-time service credit performed under this act or former acts.' (Emphasis added.) While you correctly point out that the formula is based upon 'the member's full-time or equated full-time compensation for the school year in which payment is made,' it is, nevertheless, clear from the language emphasized in Act 300, Sec. 74, quoted above, that the Legislature has directed that the Public School Employees Retirement System compute the payment based on 'compensation previously received.' A primary rule of statutory construction is that the Legislature is presumed to have intended the plain meaning of the words used by it. Dussia v Monroe County Employees retirement System, 386 Mich 244, 249; 191 NW2d 307 (1971). In view of the specific command of the statute, there is no basis to conclude that the Legislature intended computation of payment to be based upon the amount earned rather than the amount received. It is noted that the statute also provides that the compensation amount used for computing payment may not exceed the member's final verage compensation. Thus, if the member were to elect to retire in the year payment for military service credit is made, calculation of payment for purchase of military service would exclude the excess amounts received by the teacher as a result of his election to take his pay in 21 installments instead of 26 to the extent the compensation received exceeded the final average compensation of the member. It is my opinion, therefore, that the computation of payment for the purchase of military service credit by a member of the Public School Employees Retirement System is based upon the highest compensation received by the member in a school fiscal year, regardless of the school fiscal year in which it may have been earned. Frank J. Kelley Attorney General
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